The European retail sector is heading for a long-awaited revival, according to a new paper published by AEW.

In The Long-Awaited Renaissance of European Retail, the manager says retail sales in the eurozone are projected to grow by 1.7 percent annually between 2025 and 2029, outpacing both GDP growth and real disposable income growth, which is says are expected to rise by 1.4 percent and 1.0 percent, respectively, over the same period. In-store retail sales in Europe are expected to stabilise with an annual growth rate of around 0.6 percent over the next five years. This forecast reflects the projected proportion of ecommerce within total retail sales to reach 20 percent by 2029, up from 16 percent in 2024, says AEW.

The paper cites figures from INREV showing prime retail vacancy rates having settled at around 3 percent in the third quarter of 2024. At the same time, however, shopping centre vacancy rates are at 6.5 percent. Nevertheless, European prime rents